Does Your Business Meet SEC Compliance?

Running a small business is a classic part of the American Dream. It allows you to be your own boss and provide goods and services to your community. 

Starting your own business often sounds simple. All you need is a product and an office, right?

Unfortunately, this isn’t quite true. There are several conditions that a small business must meet to stay running. 

One of those conditions is SEC compliance. There are several SEC compliance requirements that businesses must follow to raise capital and offer financial services. Failure to comply can result in hefty fines and legal action.

You may wonder how to achieve SEC compliance. If so, don’t worry! We’ll answer that question in the guide below.

Requirements for an SEC Compliant Business

There are two primary components of Securities and Exchange Commission (SEC) compliance. First, they must meet the standards set in the Securities Act. The Securities Act regulates the offers and sales of securities throughout the US. 

This act requires companies to file a registration statement that explains who they are, what securities they offer, and their offerings. The SEC then reviews these registration statements to determine if your business complies with their rules. 

Second, your business must comply with the Exchange Act. This act requires companies to regularly report information about their operations, financial condition, and management. 

What Disclosures Must the Company Make?

If you make a Securities Act registration statement, the SEC staff will eventually declare it effective. From there, your business becomes subject to Exchange Act reporting rules. At this time, your business must file the following reports:

• Annual reports on Form 10-K
• Quarterly reports on Form 10-Q
• Current reports on Form 8-K

Your company may qualify as a smaller reporting company or an emerging growth business. If so, you can follow scaled disclosure requirements. Also, remember that certain thresholds can free your business from needing to report. 

First, your company can suspend its obligations if it has less than 300 shareholders. Likewise, businesses with less than 500 shareholders of record of the securities class offered and less than $10 million in assets for the last three fiscal years.

How To Ensure SEC Compliance

There are several ways to ensure your business remains SEC-compliant. First, you can make things easier for your business by consulting a securities lawyer. 

Companies can hire securities lawyers to ensure the business meets the guidelines set by the Securities Act. This way, they can include the relevant information and avoid trouble with the Commission. 

Alternatively, companies can monitor the SEC website to find the information they need. This website includes several tips for risk management that can help businesses follow the rules. 

Become an SEC Compliant Business

As you can see, SEC compliance plays a vital role in several businesses. As a small business owner, you’re responsible for ensuring your company meets these guidelines. 

So, use these tips and information to protect your business. This way, you can remain above board and focus on your company’s services. 

We recommend hiring a securities lawyer for extra safety. These lawyers can help you navigate any challenges that arise in your SEC compliance. Contact one of these lawyers today!

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